Good morning and welcome do JSL s results presentation for the 1Q17. Today here we have Mr. Fernando Simões, CEO, and Denys Ferrez, CFO and IRO.

Transcription

1 Operator: Good morning and welcome do JSL s results presentation for the 1Q17. Today here we have Mr. Fernando Simões, CEO, and Denys Ferrez, CFO and IRO. At this point, all participants are connected on listen-only mode and later we will begin the question and answer session, when you will receive more information. If you need assistance during the teleconference, please call an operator by pressing *0. I would like to inform you that this teleconference is being simultaneously translated and is recorded. We would like to clarify that any statements that may be made during this conference, concerning the business outlook and target and financial aim of the Company are based on the premises of management of JSL, in addition to being based on the Company s current available information. Forward-looking statements are not a guarantee of performance, because they involve risks and depend on circumstances that may or may not occur. Current economic conditions, industry conditions and other operational factors may affect the future results of the Company and may lead to results that differ materially from the results expressed in such forward-looking statements. I would now like to give the floor to Mr. Fernando Simões. Mr. Simões, you have the floor. Good morning everyone. I would like to thank you all for being here today. We are about to begin JSL s results presentation for the 1Q17. We are starting on slide two, where we have the main highlights for the 1Q17. Starting with the consolidated, we had consolidated net revenue totaling R$1.8 billion in the 1Q17, which accounted for a growth of 17.6% year-on-year, demonstrating the Company s resilience. Net revenues from services totaled R$1.3 billion in the 1Q and increased by 5.6% year-on-year, showing the resilience of our revenue from services, despite de current economic scenario. Net revenue from sales of assets totaled R$457 million in the 1Q, which represented a growth by 80%, thus showing our ability to sell assets and the ability of our people in selling these assets. EBITDA for the period totaled R$307 million, which corresponded to growth by 5.2% and an EBITDA margin of 23.7% in the 1Q. We made net investments in the 1Q17 totaling R$154 million, which is a reduction by 38% year-on-year and it is in line with the 2017 Pretendemos document, and is likely to be the lowest match investment since the Company went public. We had a free cash flow confirmed of R$142 million in the last 12 months. Movida s IPO in February 2017 raised a total of R$600 million and this strengthened our capital structure, and Movida became a completely independent Company with its own governance and leadership, thus enabling it to develop fully. 1

2 Going on to slide three, we have net revenue per company. On the top left, we have Logística, where we had a net revenue of R$9 million, R$877 million in services, consolidated between sales of assets and services, R$976 million, accounting for a growth of 6.2% in net revenue. It is worth highlighting that this shows the ability we have to sell our assets, even in Logística, where we have trucks and heavy machinery and equipment where we had almost doubled the sales for the same period of last year. On the top-half, on slide three, we have net revenue for Movida. We have BTF of R$47 million, totaling 3% in growth, which is in line with the strategic planning of the Company. We had R$198 million in our AC, which accounts for 35% above the same period of last year and this is in line with our growth strategy in sectors that have more added-value and more profitability. We had R$369 million in the sales of assets and this is a growth of 73% year-on-year. This shows our ability to sell our assets and the quality of our assets, and the way how we are positioned in a very differentiated way. This totals our net revenues in R$615 million in Movida for the 1Q17, accounting for a growth of 51% year-on-year, and this shows the capacity we have of growing Movida. On the bottom-left, we have the dealership, the revenue was R$200 million in the 1Q, which is a drop by 5.6%. On the same slide, we have, on the bottom-right half, the net revenue, totaling R$1.757 billion, which accounts for a growth of 17.6% year-on-year. I believe it is worth noting that this shows the ability we have of selling our assets, both heavy equipment, when we mention Logística, and lighter vehicles, when we speak of Movida, and this is a growth of 76%, and the revenues from sales of assets. We had a growth in the revenue from services of 5% and this translates the capacity and resilience of our Company in having revenue from services. We are much more than services, we seek to make strategic alliances with our clients, both in logistics and RAC, where we had a growth of 37% in Movida. This shows our ability to develop, grow and generate cash. Now I will give the floor to Denys, who will be giving you more details on the financial aspects. Denys. Denys Ferrez: Thank you, Fernando. Good afternoon, everyone. Now, moving on to slide four, which addresses EBITDA and consolidated net income, in the 1Q we had R$307.1 million in EBITDA, which represents a 5.2% increase2 year-on-year. The margin was 23.7% and remained stable across the same period. EBITDA in logistics totaled R$316 million, with a margin of 24.6% and Movida contributed with R$85 million and a margin of 34.7%. Net income totaled, in the quarter, -R$7 million, compared to the positive results year-on-year, which was R$11 million. 2

3 I would like to highlight that when we compare these figures with the net result for the 4Q, even when we exclude the extraordinary events, we present a positive pickup in this quarter, in which we are still facing an economy that is still recovering. Moving on to the next slide, we can see gross investments, and it totaled R$618 million in the 1Q, a major part of the investment corresponded to fleet renewal, around 2/3 of it. When we look at the revenue from the sales of assets, it totaled R$454 million, and, as a results, net investment for the 1Q totaled R$154 million, which is in line with what we said in the last results presentation, when we said that this year is likely to have the lowest net investment since we went public. Now, we are moving on to the next slide, where we show JSL consolidated debt. We have net debt of R$4.3 billion, which is added to the confirming payable suppliers, in 465 total net debt of R$4.8 billion and this compares to the book value of R$5.2 billion, among light and heavy vehicles and machinery, which gives a stable ratio of 1.3x the debt that has been shown. It is worth showing that whenever we look at the same pieces of equipment against the FLIP chart, this amounts even higher, around R$6.2 billion. When we look at the leverage indicators, we see that net debt plus confirming payable over EBITDAA in reference to our covenants is at 1.9x, which is under the maximum level of 3.5x, and the same metric over normal EBITDA totaled 4.5x for your reference. It is worth briefly highlighting the continuous work that has been done to manage financial assets. In the end of March, we concluded expansions totaling R$1.360 billion, and to these initiatives already undertaken, we will add others that are already underway. Now, I would like to give the floor back to Fernando. Fernando, please. Thank you, Denys. On slide seven, we have JSL consolidated results, starting with the top-half, where we have the 1Q17. We had in logistics gross revenues of R$1.142 billion and an EBITDA of R$216 million, which is a margin of 24.5%. In Movida, we had gross revenue of R$641 million, and EBITDA of R$85 million and a margin of 34%. Considering the dealership and leasing, we had gross revenues consolidated of R$1.966 billion. The EBITDA, R$037 million, a margin of 13.7%, with a net result of R$7 million. This shows an improvement when compared to the 4Q16. On the same slide, we have the bottom-half chart, which reports the last 12 months, where we have consolidated gross revenue, 7.6 and EBIT of R$506 million, a margin of 9.7% and EBITDA totaling R$1.076 billion, which accounts for a margin of 20.6% and added EBITDA of R$2.549 billion, which shows the capacity we have to generate cash. 3

4 We had a negative result of around R$200 million for a series of non-recurring factors, as we explained in the last presentation of But because of the improved results we have on the 1Q17, these negative results will be leaving and we will go ahead in more positive results, due to the hard work we do and all the effort we endeavor to do better what we do. I would like to thank you all again for being here and I would like to open the question and answers session to clarify any questions you may have. Thank you very much. Bruno Amorim, Santander: Good morning, everyone. I would like you to comment about the availability of credit line for the Company. Are you feeling anything with all the interest rate. How do you see the Company s indebtedness in the future, the leverage and liquidities and the gross position of cash? How are you dealing with these issues? Denys Ferrez: Concerning your first question, in fact, we are now seeing the banking system in Brazil making more offers. They understand that what is the worst is already gone and they want to work their money. We have been feeling this, so this has not affected us. As I have updated, we have obtained some postponements in the total of our debt, and we have a number of other operations that have already been agreed upon that are already underway or nearly being concluded. We intend to continue to manage the Company with a healthy financial debt and, of course, we will pay everything that is due in the short-term. The Company is firmly and soundly generating cash, even in this very worse recession we have been going through in the history of the country. We are looking at a policy that will maintain our liquidity levels, and we have the certainty that this more than necessary that we have. Bruno Amorim: Thank you, Denys. Could you also comment on this trend? Of how do you see the volumes within the crisis that the number of contracts has dropped because of the macro factor? Do you think volumes will pick up? Will you have more contracts and the Company will enter a more virtuous cycle? The second point is: could you comment on when you will actually experience this pick up? Have you seen clear signs this will happen? Do you think it is after the 2H of the year, when will grow again? Good morning. Bruno, it is very important to know that we see that the Company has a scenario in Brazil and we are acting on it. Despite everything that has happened, the contract levels have dropped, we believe that our portfolio is very capable of growing in several segments with a number of services. 4

5 This Company shows that in this 1Q we have seen, it is worth in 2017 than it was in 2016, but our Company has still been growing around 6.5%, and in services as well, and even despite some contracts being discontinued, because we have received other agreements as well. This gives us the possibility of witnessing the resilience of our revenues. We usually state this and when we speak of financing, we have always made the financial planning that is very well done and very well thought out. We have a board that gave us guidelines to position ourselves both in leverages and in the position of our finance, our credibility in the financial institutions. All of them have been very close to us. We have had the opportunities of obtaining financing for a number of projects, and everything has been done in a very planned way, especially Movida and Logistics. What we do not plan was the recession, but even then we the resilience of our revenue and our position in the market. So we do consider that we are focusing on lower growth, but we intent to improve margin and this is what you see in the 1Q results. And concerning our current contracts and the contracts that have decreased, we will see that they may not come back because of the economy, but because the services we supply, because of the automaker sector that has been decreasing their suppliers and improving export. So you will see that there will a trend to grow our revenue and improve our margin, and see the mix of services to other times of services, because our logistic platform that we already have. Denys Ferrez: And Bruno, just adding on your questions about leverage indicators, this is intrinsically connected to what Fernando has mentioned in the last conference that we have the lowest investment since we went public, but we still have a CAPEX that is planned within Movida. Movida has gone public and we have talked to investors and mentioned the planning that is going on, and based on what we have to the end of the year, but in the medium term, as a result of the conclusion of this investment period in Movida, as Movida will be managed and a decrease in the investment in expansion. This will be our focus and leveraging in the mid-run, if we do not say any extraordinary factor, because if we take into account our work, management and board, we will continue on track. Bruno Amorim: I have another question if you have time which concerns the new contract. If you have a scenario of lower interest rate, do you think you will have a return rate which will be lower, because the interest and capital cost are following? Or this return rate is more stable and will not suffer so much change? How do you see this? 5

6 What I can say is that return rate, when there is CAPEX, the trend is to increase, because we see that the program for renewal that had a financing that came from Crédito Fácil will have a lot of competition and there are many people who are not being very responsible and offering their services. When you have CAPEX too and the Company is being set better by finance institutions, this gives you a price of reference and a margin that will represent a greater return rate. And this is will give to the industry the idea of not doing anything does not depend on CAPEX, or you demand more services and less competition, and people was more governance and more responsibility. So this trend is where you have capacity to have a better return rate. And If you grow in segments that do not have CAPEX, then you have more third part operation, more intelligent operation. The trend is to have a better margin for everything and this will help you to lower your cost. So if I understood you correctly, we have to adjust the structure of the Company to this new reality. Bruno Amorim: Thank you. Operator: Since there are no further questions, I would like to give the floor to Mr. Fernando Simões for his final remarks. Mr. Simões. I would like to wrap up the call and highlight that in Logística, not in the Company as a whole, we have since our structure to cope with a better return margin, and in a differentiated way we have several segments in order to meet industries that want more productivity, with more safety in terms of the quality of the services. And this has been a focus of all of the main national industries. They look for more productivity and more safety. And to do several projects that gives us the feeling that we have opportunity for growth in this segment with a lower cost and with a very well structured Company. When we speak of Movida, as you have seen, we are now seeing a Company that in the last two to three years has built a base and a solid foundation in order to fully develop and this was done in a very high quality way. When we speak of our dealership, this is a smaller business, independent, but it is supplemental to the others. You can also see the adequate structure that despite the terrible economic scenario, you can see that the negative results are peaking up again. So I would like to highlight to all of you that the figures, so the adjustment in the structure as a whole to deal with this new economic scenario that is in line with our strategic planning to develop the Company for the next year. 6

7 I would like, once again, to thank all of you in the name of all the JSL team for being here, for this opportunity of clarifying and thank you all very much for your attention. Have a nice weekend. Operator: Thank you. JSL s results presentation is now closed. Thank you for taking part and have a good day. 7